Oil - Warning Phase

The current stock market is much dependent on the direction of oil prices. Higher oil prices increases the risk of higher inflation which is detrimental for stock market.

Crude oil prices has corrected from a high of $147 to $122 last night. That is a correction of around 17% in 2 weeks.




Looking at USO (US Oil Fund ETF), the price moved from $119 to $98 dollars in its recent down slide. The phase chart is showing warning signs having moved into “Warning” phase since 17 July 08. A similar pattern occurred in early January where the “Warning” phase lasted 11 trading days. The 200 day moving average for USO is at $86 dollars which is 12% below the current price.